The BSE benchmark Sensex, down 123.91 points to 18,884.19, slipped under 19,000 for the first time in two weeks. NSE’s Nifty declined 51.55 points to 5,694.40.
Shares of banks were among the top losers, as the Reserve Bank of India’s (RBI’s) cautious policy outlook yesterday dashed their hopes of aggressive rate cuts over the year. Investors were pinning their hopes on banks’ bond buys churning profits if RBI cut rates at a faster pace.
Foreign institutional investors (FIIs) net-sold shares worth Rs 236.72 crore, while their domestic peers offloaded Rs 356.93-crore shares. FIIs, which have pumped over Rs 50,000 crore into Indian equities so far in 2013, had yesterday made purchases worth Rs 147 crore, a modest amount compared to the recent daily purchases.
Brokers said investors were worried the government might hold back from raising diesel prices to improve its deteriorating finances. That might prompt global agencies to downgrade India’s sovereign rating.
The political situation would continue to determine the direction of the markets in the near term, said Sandip Sabharwal, head (portfolio management services), Prabhudas Lilladher.
BSE’s mid-cap stocks fell 1.9 per cent, while the small-cap index dropped 2.3 per cent. There were 2,127 losers on the Sensex, compared with 761 gainers, indicating a deeper bearish undertone.